How to make a 13-week cashflow forecast
Start with today’s bank balance. Set up 13 weekly columns. Add the customer payments you expect each week, then every payment going out, including PAYE, VAT and loan repayments on their real dates. Find the week with the lowest balance, and act on it.
A 13-week cashflow forecast covers one quarter, week by week. Banks and turnaround advisers use it because it’s the period in which you can still change the outcome. Here’s how to build one in a spreadsheet.
Step 1: Start from today’s bank balance
Add up the cleared balance in every business bank account today. Use the bank figure, not your accounting software’s balance, unless your bank feed is fully reconciled.
Step 2: Set up 13 weekly columns
Pick a consistent week, such as Monday to Sunday. Label each column with the week-commencing date. Add rows for opening balance, money in, money out and closing balance.
Step 3: Add money in, by when it will really arrive
List every unpaid customer invoice and place it in the week you expect the money, not the week it’s due. Look at how each customer has paid in the past. If a customer always pays 20 days late, plan for that.
Then add sales you haven’t invoiced yet but are confident of, and any other receipts such as grants or a VAT repayment. Be cautious: it’s safer to be pleasantly surprised.
Step 4: Add the payments you know about
- Payroll: net pay on payday.
- PAYE and National Insurance: usually due to HMRC by the 22nd of the following tax month if you pay electronically.
- Pension contributions: usually due by the 22nd of the month after deduction.
- VAT: normally due one calendar month and seven days after the end of your VAT period.
- Rent, loans and finance: on their contracted dates.
- Subscriptions and direct debits: software, utilities, insurance.
Step 5: Add supplier payments and one-offs
Use your unpaid bills, placed when you plan to pay them. Then add the irregular items: annual insurance, equipment, bonuses, Corporation Tax (for most small companies, due nine months and one day after the year end).
Step 6: Calculate each week’s closing balance
Closing balance = opening balance + money in − money out. Each week’s closing balance becomes the next week’s opening balance.
Step 7: Find your lowest point and compare it with your buffer
Highlight the lowest closing balance in the 13 weeks. Decide the minimum cash you want to hold for safety. Many owners aim for at least one month of fixed costs. If any week falls below that, you have a decision to make.
Illustrative example
A business starts with £42,000. Payroll of £18,000 goes out at the end of each month, with PAYE of £6,000 on the 22nd. In week 9 a £12,600 VAT payment lands just as two customers pay a fortnight late. The forecast shows a low of £3,100 in week 9, below a £15,000 buffer. With seven weeks’ notice, chasing two invoices and moving one supplier run closes the gap at no cost.
Step 8: Roll it forward every week
Each week, drop the week just finished, add a new week 13, and update the opening balance from the bank. Compare what you forecast for last week with what actually happened. Where they differ, adjust your assumptions.
What to do if the forecast shows a gap
- Chase the invoices that matter most for that week.
- Agree new dates for supplier payments you can move.
- Talk to HMRC early if a tax payment is the problem.
- Only then look at funding, and apply while you still have weeks to spare.
Skip the spreadsheet
Lucid builds this forecast from your Xero data in minutes, places customer payments by how each customer really pays, puts tax on its real dates, and rolls it forward automatically every day.
Common questions
Why 13 weeks?
Thirteen weeks is one quarter. It covers three payroll cycles, at least one VAT payment and most customer payment cycles, and it’s near enough to forecast accurately.
Should a 13-week forecast include VAT?
Yes. Include VAT in receipts and payments, and the VAT payment to HMRC on its due date. Leaving VAT out is one of the most common reasons forecasts miss a dip.
Is a 13-week cashflow forecast the direct method?
Yes. It lists actual expected receipts and payments, which is the direct method. It’s more accurate in the short term than adjusting profit figures.
How long does it take to build?
A first version in a spreadsheet usually takes two to four hours, then about 30 minutes a week to keep it current. Tools that connect to your accounting software can do it automatically.
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